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Hyundai moving beyond 'value' brand reputation

Styling of the Sonata sedan has helped move Hyundai away from the perception as a value brand.

Hyundai's U.S. boss says the brand is changing from a "value" brand into a "valuable" brand.

John Krafcik, CEO of Hyundai Motor America, said the brand is quickly shedding its roots as a purveyor of new cars for used-car prices and becoming a major player in the global industry.

For example, consumers were willing to pay 96 percent of a Hyundai vehicle's sticker price in 2011, compared to 86 percent in 2009, Krafcik said.

Hyundai has raised transaction prices 14 percent since 2009 but maintained a strong reputation for value, Krafcik said. Hyundai has also cut vehicle rebates to just 18 percent of its incentive spending in 2011, down significantly from just three years ago.

"The orthodoxy inside the company just three or four years ago was, seriously, 'We can't sell a car without a rebate on the hood,'" Krafick said.

Noting how some perceive Hyundai's success to have been achieved overnight, Krafick noted that it's taken Hyundai 25 years of selling vehicles in the United States to gain a market share of 5.1 percent.

"You do that math," he said. "That's not an overnight success."

"We have an awful lot of way to go. We're still a relatively small player in the U.S. market but honestly, we have big ambitions," he said.

Still, Hyundai boosted U.S. sales 20 percent to 645,691 vehicles in 2011, which included a 41 percent gain in Elantra sales and a 15 percent gain in Sonata sales. As a whole, the U.S. market rose 10 percent last year.

Krafcik said that 10 years ago, Hyundai was content being a fast follower that benchmarked and then tweaked what the industry was already doing.

"We had a word for it internally for a while, and it was 'gaining competitive permission to do something,'" Krafcik said.

The big change for Hyundai, he said, can be seen with the brand's current generation of products, starting with 2010 model Tucson crossover. Instead of developing cars to be released in five years benchmarked on current-market offerings, Krafcik said Hyundai seeks to exceed industry norms with its products.

Hyundai took a major hit in customer satisfaction with the Hyundai retail experience, falling to No. 15 among mainstream brands in J.D. Power's Sales Satisfaction Index in 2011 from No. 7 in 2010.

"This is where we as an industry, and certainly we at Hyundai, struggle the most," Krafcik said.

Focusing on customer delight will be Hyundai's main focus in 2012, Krafcik said.

To that end, Hyundai is rolling out a sales training program, initially developed only for dealers selling Hyundai's luxury cars, to all its exclusive dealerships.